Why Carrying a Balance Is to Be Avoided

As discussed earlier in the chapter, the most common way people get into trouble with credit cards is by carrying a balance from statement to statement—in effect using the credit card as a source of a long-term loan. If you are one of these people carrying a balance regularly on your cards, perhaps the most important thing you can do on your road to taking charge of your finances is to pay off that balance. That’s the topic of this section.

There’s no mystery as to why carrying a balance on a credit card is a bad idea. It’s the interest you pay, plain and simple. Credit card interest rates range from the high to the extremely high, and throwing your hard-earned money away on interest charges is completely at odds with taking charge of your finances.